This post addresses avoiding sales taxes.
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Making Good Use of Out-of-State Relatives. Please respond to the following:
(The fact that a use tax has been implemented in order to prevent the avoidance of a sales tax indicates that the loss of revenue is recognized.) Discuss how common you believe this scenario may be and give example(s) to support your answer.
- As a CPA, determine how you can protect your clients from future tax implications of attempting to avoid state sales tax.
Discovering Lost Dependency Exemptions. Please respond to the following:
- Discuss the key factors that should be considered when determining dependency exemption eligibility.
- Evaluate who should take the dependency exemption for Jesse and state how you know for certain.
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Solution Summary
The solution provides a detailed analysis of how the taxpayer avoided paying sales tax by using relatives in different states that have no sales tax to purchase the items and ship the items to the taxpayer. This solution also addresses key factors that should be considered when determining dependency exemption eligibility and who should take an exemption for Jesse, listed in the dependency case.
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Making Good Use of Out-of-State Relatives. Please respond to the following:
-Discuss how common you believe this scenario may be and give example(s) to support your answer.
-When one person buys items for another person in a different state, the main intention is to avoid paying sales tax. Out of state relatives are often used for this purpose. If I have a sister in another state where the sales tax is either lower or there is no sales tax, one of the ways I avoid sales tax is to ask the relative to purchase the item and then have it shipped to me. The problem is that if the item is very expense, I will be subject to paying a federal gift tax. According to the law, a person, including a relative, can gift up to $13,000 per year to an individual tax-free. If the item or money is more than $13,000, a gift tax must be paid on the difference. If caught, I will have to pay a gift tax if the item I asked a relative to buy is more than $13,000. This is very common with people who live on state borders. People go across state lines to make purchases, and then bring the purchased goods back home, in order to avoid paying state sales tax. There are ...
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